The Wood and Fiber Supply Chain Experts
Wood and Paper Manufacturers Right-Size Output
From the March 2009 Forest2Mill newsletter.
Manufacturers of durable goods have been struggling to match output
with demand. Overall, new orders fell 2.6 percent in December, the fifteenth month in a row that
the number has declined. Shipments fell as well; they were down one percent in December. Despite
lower demand, inventories of durable goods increased to the highest level since 1992.
Wood and paper products companies, however, have not been contributing to these numbers.
Wood products output in December was just over half the peak in October 2005. Capacity utilization
for wood products industries was 22 percent lower than it was a year earlier. And while the
drawdown in output from paper products companies has been more gradual, December’s number was 75
percent of the level reached in February 2000. Capacity utilization among paper manufacturers was
11 percent lower than it was a year earlier.
In January, production and inventories of wood and paper products declined again, a sure
sign that these companies are right-sizing output. While some further capacity reduction lies ahead
in 2009, these numbers suggest that the wood and paper sectors are in better position to weather
the remainder of this "great recession" than those in many other sectors.